StanCorp Financial Group Inc. (SFG), the seller of disability insurance, tumbled the most in 11 months as second-quarter profit missed estimates and the company said it expects to fall short of its full-year earnings forecast.
The insurer dropped 11 percent to $33 at 4 p.m. in New York trading, the biggest decline since Aug. 8. The Portland, Oregon- based firm has slumped 10 percent this year.
Net income for 2012, excluding some investment results, will probably fail to meet the insurer’s previous forecast of as much as $3.90 per share as the group long-term disability business deteriorated, the company said in a statement late yesterday. Second-quarter operating income was probably about 51 cents a share, missing by 30 cents the estimate of Randy Binner, an analyst at FBR Capital Markets.
“Less favorable claims experience in group long-term disability was once again the culprit,” Binner wrote in a note today. “Earnings visibility at StanCorp continues to remain poor due to the elevated group-disability loss ratio.”
Standard & Poor’s said it may reduce the insurer’s credit rating by one level from BBB+ “if the company continues to post poor results.” The insurer is scheduled to report complete second-quarter results on July 23.
Insurers including Prudential Financial Inc. (PRU) and Hartford Financial Services Group Inc. (HIG) have struggled with disability results. Prudential, the second-largest U.S. life insurer, appointed Andrew Sullivan to lead its disability unit last month and replaced the head of its group insurance unit in April. Hartford said in May that it’s raising rates and changing managers at its group disability business.
William Wheeler, president of the Americas at MetLife Inc. (MET), the largest U.S. life insurer, said in May that rivals didn’t charge enough for group disability coverage as they sought to increase sales after the financial crisis.
Unum Group (UNM), the largest U.S. disability insurer, fell 1.3 percent to $18.93 in New York.
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